September 18, 2021

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The Fed is likely to start tightening monetary policy this year

The Fed is likely to start tightening monetary policy this year

The US economy has reached a point where it no longer needs such strong support from the central bank.

Aug 27, 2021 at 7:29 PM TASR

Washington. The US Federal Reserve is likely to start tightening monetary policy by the end of this year.

This was stated at a virtual seminar for central bankers in Jackson Hole by US Federal Reserve Chairman Jerome Powell. But at the same time, he said, the bank still wanted to wait as interest rates increased.

According to the head of the Federal Reserve, the US economy has reached a point where it no longer needs such strong support from the central bank. He noted that if the current development of the economy and labor market continues, the Fed may begin to limit the volume of bond purchases by the end of this year.

On the other hand, he indicated that the timing and extent of the reduction in bond purchases would not automatically signal higher interest rates.

The Federal Reserve has kept the key interest rate near zero since the start of the new epidemic Corona Virus In March 2020, the Associated Press reported. She added that interest rates are likely to start rising only after the Federal Reserve does not complete the process of reducing bond purchases.

Powell also added that the US Federal Reserve is closely monitoring the impact of the most contagious infection delta variable The new Corona virus on the economy. This variable led to another sharp increase in the number of infections in the United States, especially in the south and west of the country.

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“Although the delta variants of the novel coronavirus pose a short-term risk, the prospects for continued progress toward full employment are positive,” Powell added at a seminar in Jackson Hole. This happened almost for the second year in a row due to the pandemic.